A yearslong investigation into a time-share operation accused of misleading buyers came to a close this week with Attorney General Eric Schneiderman announcing a record $6.5 million settlement with the Manhattan Club.
Douglas Wasser, a real-estate attorney at Wasser Russ who represents a group of 33 Manhattan Club unit owners, said he was anxious to see who would be eligible for the restitution fund. The 200 W. 56th St. hotel had roughly 14,000 unit owners, according to the attorney general’s office.
“I think the attorney general has done a fabulous job on this whole thing,” Wasser said, adding that the settlement requirement forcing the owner and operators of the Manhattan Club to relinquish control would “restore confidence” in the time-share project.
Under the terms of the settlement—the largest in the recent history of the Real Estate Finance Bureau—the operators of the Manhattan Club acknowledged that it “repeatedly misled share owners about the club’s reservation process, their ability to sell back their shares, and the details of the club’s state-approved offering plan,” according to Schneiderman’s office.
In addition to restitution, the owners and operators—developers Ian Bruce Eichner; Leslie H. Eichner, Stuart P. Eichner, Scott L. Lager, T. Park Central, O. Park Central, Park Central Management, Hospitality Advisors, New York Urban Ownership Management, and Manhattan Club Marketing Group—have been barred from the time-share industry. The owner and operators will also have to relinquish management control, sell their stakes to a third-party purchaser and remove all sponsor-appointed current officers and directors from their positions as members of the Board of the Timeshare Association.
In 2014, Schneiderman’s office announced a court order barring sales in the Manhattan Club time-share hotel after complaints of high-pressure sales tactics and lack of available rooms for those who had purchased shares. At the time, about 14,000 people owned shares in the hotel’s 286 suites and owners’ annual common charges had jumped approximately 200 percent over the previous 10 years, according to the office.
Two partners at Gibson, Dunn & Crutcher’s New York City office—Orin Snyder and former counsel to Gov. Andrew Cuomo Mylan Denerstein, co-chairman of Gibson Dunn’s public policy practice group—represented the majority of the owners and operators of the Manhattan Club. Neither Snyder nor Denerstein returned calls for comment. Lager was represented by Jeffrey Rotenberg, a partner at DLA Piper who also did not return request for comment.